Opinions differ on the subject. The text on the Wiki largely reflect's Mike Hern's views.
Here are my views:
Without a sharp constraint on the maximum blocksize there is currently _no_ rational reason to believe that Bitcoin would be secure at all once the subsidy goes down.
Bitcoin is valuable because of scarcity. One of the important scarcities is the limited supply of coins, another is the limited supply of block-space: Limited blockspace creates a market for transaction fees, the fees fund the mining needed to make the chain robust against hostile reorganization. I have not yet seen any suggestion as to how Bitcoin is long term viable without this except ones that argue for cartel or regulatory behavior (both of which I don't consider viable: they moot the decentralized purpose of Bitcoin).
Even going beyond fee funding— as Dan Kaminsky argued so succinctly— with, gigabyte blocks bitcoin would not be functionally decentralized in any meaningful way: only a small self selecting group of some thousands of major banks would have the means and the motive to participate in validation (much less mining), just as some thousands of major banks are the primary drivers of the USD and other major world currencies. An argument that Bitcoin can simply scale directly like that is an argument that the whole decentralization thing is a pretext: and some have argued that it's evidence that bitcoin is just destined to become another centralized currency (with some "bonus" wealth redistribution in the process, that they suggest is the real motive— that the decentralization is a cynical lie).
Obviously decentralization can be preserved for increased scale with technical improvements, and those should be done— but if decentralization doesn't come first I think we would lose what makes Bitcoin valuable and special... and I think that would be sad. (Though, to be frank— Bitcoin becoming a worldwide centrally controlled currency could quite possibly be the most profitable for me— but I would prefer to profit by seeing the world be a diverse place with may good and personally liberating choices available to people)
Perhaps the proper maximum size isn't 1MB but some other value which is also modest and still preserves decentralization— I don't have much of an opinion beyond that fact that there is some number of years in the future where— say— 10MB will be no worse than 1MB today. It's often repeated that Satoshi intended to remove "the limit" but I always understood that to be the 500k maximum generation soft limit... quite possible I misunderstood, but I don't understand why it would be a hardforking protocol rule otherwise. (and why the redundant soft limit— and why not make it a rule for which blocks get extended when mining instead of a protocol rule? ... and if that protocol rule didn't exist? I would have never become convinced that Bitcoin could survive... so where are the answers to long term survival?)
(In any case the worst thing that can possibly happen to a distributed consensus system is that fails to achieve consensus. A substantial persistently forked network is the worst possible failure mode for Bitcoin: Spend all your own coins twice! No hardfork can be tolerated that wouldn't result in an thoroughly dominant chain with near certain probability)
But before I think we can even have a discussion about increasing it I think there must be evidence that the transaction load has gone over the optimum level for creating a market for fees (e.g. we should already be at some multiple of saturation and still see difficulty increasing or at least holding steady). This would also have the benefit of further incentivizing external fast payment networks, which I think must exist before any blockchain increase: it would be unwise to argue an increase is an urgent emergency because we've painted ourselves into a corner by using the system stupidly and not investing in building the infrastructure to use it well.
You can get around it (NAT), and you can fix it (IPv6) but the former is annoying and the latter is taking forever
It's not really analogous at all. Bitcoin has substantial limits that cannot be fixed within the architecture, unrelated to the artificial* block-size cap. The blockchain is a worldwide broadcast medium and will always scale poorly (even if rocket boosters can be strapped to that pig), the consensus it provides takes time to converge with high probability— you can't have instant confirmations, you can't have reversals for anti-fraud (even when the parties all desire and consent to it), and the privacy is quite weak owing to the purely public nature of all transactions.
(*artificial doesn't mean bad, unless you think that the finite supply of coin or the limitations on counterfeiting, or all of the other explicit rules of the system are also bad...)
Its important to distinguish Bitcoin the currency and Bitcoin the payment network. The currency is worthwhile because of the highly trustworth extreme decentralization which we only know how to create through a highly distributed and decentralized public blockchain. But the properties of the blockchain that make it a good basis for a ultimately trustworthy worldwide currency do _not_ make it a good payment network. Bitcoin is only as much of a payment network as it must be in order to be a currency and in order to integrate other payment networks.
Or, by analogy— Gold may be a good store of value, but it's a cruddy payment system (especially online!). Bitcoin is a better store of value— for one reason because it can better integrate good payment systems.
See retep's post on fidelity bonded chaum token banks for my personal current favorite way to produce infinitely scalable trustworthy payments networks denominated in Bitcoin.
Cheers,